European Union leaders completed the testiest part of a major summit in Brussels on Tuesday night, reaching a deal on loosening the growth and stability pact which ensures the course of the common currency, the euro, and derailing a directive that would have made it easier for companies to offer services across borders throughout the EU. Normally, these issues would be real snoozers, but given how deep they are dividing Europeans right now, it's worth paying more attention.

Looking at the bigger picture, the financial daily Handelsblatt writes that something is going "terribly wrong" with Europe at the moment. "The big projects with which France and Germany, above all, wanted to make the EU ready for the future are not working." The Lisbon process that was supposed to make us the world's strongest region in economic competition is wasting away. The European constitution is dividing nations instead of uniting them. The process of enlargement is meeting with ever greater reservations in EU countries. The common foreign policy, which had already fallen apart during the Iraq war, is revealing itself to be an illusion in practice. The latest example is that of the lifting of the EU arms embargo against China, announced by German Chancellor Gerhard Schroeder and French President Jacques Chirac, but which won't happen. And the currency union that was once the high point of European Unity is degrading itself. "Perhaps the European Union is on its away towards an institutional breakdown due to fatigue," the paper concludes.

Writing about the changes to the stability pact, the Financial Times Deutschland, is less doom and gloom. "The stability pact is dead," it writes, "long live stability!" The old stability pact didn't just fail because Germany and France were no longer able or willing to adhere to the oft quoted three-percent of gross domestic product deficit spending limit, it notes. "It had already proven itself as counterproductive because it set perverse incentives for meeting the correct goal of stable national finances." In order to adhere to the deficit caps, Germany's finance minister made the economic crisis worse by resorting to pro-cyclical savings programs, slashing (government) investments and selling off debt in a way that sinks the official deficit now but will be expensive for Germans for generations to come. "The loosening of the three-percent rule now allows for more rational policy," the paper writes. "But uncontested remains the fact that, if economic growth remains meager and spending isn't reduced, Germany's finances are headed for a serious crisis."

The conservative Frankfurter Allgemeine Zeitung, meanwhile, sets its sights on the dispute over the European Commission's apparently derailed plan to open up the services market across the EU. The paper notes that the services directive is unpalatable in its current form for Chirac, whose country is facing a tight referendum on the European constitution, and Schroeder, whose Social Democrats are facing an uphill election battle in the state of North Rhine-Westphalia. The general fear is that the "country of origin" principle would allow people like carpenters from Eastern Europe to come to Western Europe and pay the taxes and abide by the regulations they would have been held to back at home. But, the paper notes, exceptions are already built into the regulations that should address most concerns. But a few reasonable arguments are unlikely to change detractors' minds. "They only see the losers who won't be able to withstand the increased competition." Still, it argues, the EU internal market for goods has shown that even though cheaper offers from abroad can increase pressure on domestic companies, they also make the economy more dynamic. "Chirac and Schroeder should know that protecting the status quo also has its price: It comes at the cost of millions of jobless."

Debate over the fate of Terri Schiavo, the 41-year-old, severely brain-damaged American woman whose feeding tube was removed on Friday also continues to dominate German news broadcasts, front pages and editorial pages.

The center-left Sueddeutsche Zeitung looks to US Federal Court Judge James Whittemore, who ruled against reinstating the feeding tube on Monday, and sees a "courageous" man. "With his ruling," the paper writes, "he confirmed those of 12 other cases and stood against Congress and the US president." He has stood up against the onslaught of conservative ideologues. "One man against a political steamroller," the paper notes, "that demands recognition." Nevertheless, the personal drama surrounding the coma patient's family hasn't ended. By writing a law tailored to Schiavo over the weekend, Congress has massively encroached upon the separation of powers, the paper claims. The case will now likely go to the Supreme Court where, the editorialists hope, "an enormous legal policy error could be corrected within a few days." However, the paper laments, the case will give the conservative right more arguments to appoint unfilled judicial seats as quickly as possible -- "and to their taste."